Judge Bucklo denied defendant Life+Gear's Fed. R. Civ. P. 12(b)(2) and (3) motion to dismiss for lack of personal jurisdiction and improper venue in this patent dispute. While Life+Gear did not have Illinois offices, it did have an interactive website and at least one Illinois sale. Life+Gear also sold product to two distributors that sold that product in Illinois and Life+Gear was reasonably aware of those channels of sale.
Venue was proper because venue in a patent case exists wherever there is personal jurisdiction.
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ArrivalStar S.A. v. Geo-Comm, Inc., No. 11 C 5016, Slip Op. (N.D. Ill. Jul. 27, 2011) (Shadur, Sen. J.).
Judge Shadur sua sponte challenged the sufficiency of plaintiff ArrivalStar's venue allegations. Venue is proper in patent cares: 1) where the defendant resides; or 2) where the defendant allegedly committed the accused acts and had a regular place of business. Geo-Comm resided in Minnesota. So, only the second option was possible. ArrivalStar did plead that Geo-Comm sold accused products in the district. But ArrivalStar failed to plead that Geo-Comm had a regular and established place of business in the district. Instead of requiring immediate repleading or briefing, the Court set a status conference to discuss the issue.
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Dental Arts Lab. V. Studio 360, The Dental Lab, LLC, No. 10 CV 4535, Slip Op. (N.D. Ill. Nov. 23, 2010) (Dow, J.).
Judge Dow denied defendant's Fed. R. Civ. P. 12(b) motion to dismiss this Lanham Act dispute regarding plaintiff's 360 Dental Laboratories mark. Defendant was a Nevada entity which had sold product to sixteen Illinois dentists, making up 1.2% of defendant's gross revenue, and maintained a website that used the mark and offered defendant's products for sale. Plaintiff only argued that the Court had specific, not general jurisdiction. While defendant's contacts were minimal - sixteen customers and 1.2% of revenues - they involved the alleged tortious acts at issue. The sales, therefore, were sufficient minimum contacts to create specific jurisdiction. Although the Illinois sales were allegedly de minimus, each sale was allegedly a tortious act and the Court could have had jurisdiction based upon even one of the sales. Because defendant's venue arguments mirrored its jurisdiction arguments, venue was also proper.
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Trading Techs., Intl., Inc. v. BGC Partners, Inc., No. 10 C 715, Slip Op. (N.D. Ill. Aug. 17, 2010) (Kendall, J.).
Judge Kendall denied defendant BGC Partners' ("BGC") motion to dismiss as moot because of plaintiff Trading Technologies' ("TT's") subsequently filed amended complaint. Courts routinely deny without prejudice motions to dismiss when an amended complaint is filed, but this case was unique because TT opposed dismissal. TT argued that BGC's improper service argument should be dismissed with prejudice and the remaining arguments should be heard to avoid delay because TT continued asserting similar claims in the amended complaint. The service arguments were, however, moot because BGC did not make the service arguments in response to the amended complaint.
The Court also denied the motion to dismiss without prejudice as to the remaining arguments. While the claims may have remained factually similar, BGC's arguments went to jurisdiction, not the sufficiency of the facts. Furthermore, the amended complaint added several new defendants. BGC and the other defendants would have been prejudiced if they were not given the opportunity to review the amended complaint and to collectively decide how to address any jurisdiction or venue issues.
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The Ticketreserve, Inc. v. Viagogo, Inc., No. 08 C 502, Slip Op. (N.D. Ill. Aug. 11, 2009) (Kendall, J.).
Judge Kendall denied defendants' Fed. R. Civ. P. 12(b)(3) motion in limine for improper venue and granted defendant Viagogo, Inc.'s ("Viagogo") Fed. R. Civ. P. 12(b)(2) motion to dismiss for lack of personal jurisdiction. Defendants agreed that venue was improper based on an arbitration clause in a nondisclosure agreement the parties requested when they explored a joint venture. Defendants agreed that the patented technology was disclosed pursuant to the nondisclosure agreement.
But because plaintiff's international patent on the same technology as the U.S. patent, issued before the nondisclosure agreement the patent infringement claim was expressly excluded from the nondisclosure agreement and its arbitration claims.
The Court then dismissed Viagogo for lack of personal jurisdiction. Viagogo had no contract with Illinois to create personal jurisdiction. And while the viagogo.com interactive website likely created specific jurisdiction for its owner, the evidence suggested that Viagogo Ltd., which did not contest personal jurisdiction owned and operated the website, not Viagogo, Inc.
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As promised, the new Patent Reform Acts were introduced in Congress this week -- click here for the Senate bill and here for the House bill. While I have not yet done a comprehensive review, I understand that the bills are largely similar. Here are some highlights of the bills:
They move from the current first to invent system to the international norm, first to file.
Expanded reexamination and a new period of post-grant review.
Damages provisions require that the specific contribution over the prior art be considered and allow consideration of licensing terms for similar noninfringing substitutes. As Dennis Crouch points out, for alternatives in the public domain the comparable license could be free.
Specifically allows for Federal Circuit jurisdiction of interlocutory claim construction appeals where the district court approves the appeal.
Federal Circuit judges would no longer be required to live within fifty miles of the District of Columbia.
The venue provisions are changed to narrow possible venues.
There is plenty of commentary in the blogosphere. Here are some of the best:
271 Patent Blog (giving highlights, noting changes from the last version and do not miss Peter Zura's blog makeover);
Patent Docs (discussing the Senate press conference announcing the Senate bill and noting BIO's response to the bills); and
Patently-O (giving highlights and noting changes from the most recent attempted reforms) and here (reposting comments from Google's Head of Patents and Patent Strategy, Michelle Lee).
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ACCO Brands USA LLC v. PC Guardian Anti-Theft Prods., Inc., No 06 C 7102, Slip Op. (N.D. Ill. Dec. 10, 2008) (Zagel, J.).*
Judge Zagel denied defendant PC Guardian's ("PCG") renewed motion to transfer plaintiff's patent suit against PCG, but not necessarily the other defendants, to the Northern District of California, where plaintiff and PCG were litigating a related patent. The Court previously denied this motion, reasoning that all issues related to the patents in suit should be tried in one court, as opposed to the Northern District of California resolving the case as to PCG and the Northern District of Illinois to resolve the issues as to the other defendants in this suit.
PCG renewed its motion because its new Northern District of California inequitable conduct motion implicated both the patents in suit in the Northern District of California and those at issue in the Northern District of Illinois. But the Court held that transfer of the case would still leave this Court to resolve the identical issues as to the remaining defendants. Additionally, because the Northern District of California court would likely rule on the issues before this Court, this Court would have the opportunity to consider the California rulings before deciding the issues. And this Court had already construed the claims in this case (click here), resulting in only two minor differences between the courts.
* Click here for more on this case in the Blog's archives.
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Moran Indus., Inc. v. Higdon, No. 07 C 6092, Slip Op. (N.D. Ill., Jul. 26, 2008) (Guzman, J.).
Judge Guzman held that the Court had personal jurisdiction over the defendants, but dismissed plaintiff's trademark and breach of contract case for improper venue. Defendants, various franchisees of plaintiff, were all residents of and operated their franchises in various combinations of Indiana, Kentucky and Tennessee. Each relevant franchise agreement had a forum selection clause consenting to jurisdiction in the Northern District. But the Court held that the clause was permissive, allowing defendants to challenge personal jurisdiction. While defendants were not Illinois residents, their numerous contacts with plaintiff -- sending plaintiff royalty payments and reports to Illinois and attending training in Illinois, among others -- created personal jurisdiction.
While defendants were subject to personal jurisdiction in Illinois, the Court held that the Northern District was not the proper venue. A substantial part of the harm alleged occurred not in Illinois, but in Indiana, Kentucky and Tennessee. Those were the states where defendants allegedly failed to make payments, not Illinois. The Courts, therefore, dismissed the case.
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U.S. Gypsum Co. v. 3M Innovative Props. Co., No. 07 C 6381, 2008 WL 514976 (N.D. Ill. Feb. 20, 2008) (Darrah, J.).
Judge Darrah granted defendants' (collectively "3M") Fed. R. Civ. P. 12(b)(3) motion to dismiss for lack of venue. Plaintiff United States Gypsum ("Gypsum") filed this action asserting its own patent and seeking declaratory judgments regarding 3M's patents, all to low dust construction compounds. Shortly thereafter, 3M filed a corresponding suit in the District of Minnesota. Prior to filing their suits, the parties were in extended negotiations regarding cross-licensing of their patents. Pursuant to those negotiations, the parties entered a confidentiality agreement ("Agreement") requiring that all disputes "arising from the subject matter of this Agreement shall be brought . . . exclusively in [D. Minn.]" Because the express subject matter of the Agreement was the patents in suit and because the Agreement, negotiated by sophisticated parties, set D. Minn. as the exclusive jurisdiction, the Court dismissed the case in favor of 3M's action filed in the D. Minn.
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The Patent Reform Act is on the Senate's calendar and is expected to be voted on in February. The version voted out of the Senate Judiciary Committee is different than the version passed by the House. Experts expect that, instead of forming a joint committee to resolve the differences which generally requires a second vote by both chambers, the House will vote on any version of the Patent Reform Act passed by the Senate.
That means that it is time to take a close look at the Senate version of the Patent Reform Act. The damages and venue provisions continue to be some of the most significant and hotly-contested. And it is no surprise that the various stakeholders are making their positions heard loudly again. I considered analyzing each provision of the current Senate bill, but Patent Docs beat me to it and did an excellent job:
Venue
Damages
First to file
Several other blogs are also keeping a close eye on the stakeholders and the sausage-making aspects of the Patent Reform Act, among the best:
271 Patent Blog
Filewrapper
IP Biz
Patent Barristers
Patently-O
Maryland IP Law Blog (and here regarding the increased internet coverage of Patent Reform during February)
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Gencor Pacific, Inc. v. Federal Labs., Corp., No. 07 C 168, 2007 WL 2298367 (N.D. Ill. Aug. 3, 2007) (Guzman, J.).
Judge Guzman granted defendants' Fed. R. Civ. P. 12(b)(3) motion to dismiss for lack of venue. Plaintiff Gencor Pacific ("Gencor") and defendant Federal Laboratories ("Fedlabs") both distribute products including caralluma powder. Gencor alleged that Fedlabs infringed Gencor's copyrights, engaged in unfair competition and other related state law claims by using various Gencor studies and literature to promote Fedlabs's products. Gencor also alleged that Fedlabs's Chairman defendant Jeffery Taub left a defamatory voicemail message for an Illinois-based Gencor distributor. Because defendants are all New York residents, venue was only proper in the Northern District if a substantial part of the events at issue occurred in Illinois. Gencor argued that the Illinois voicemail and various Fedlabs mailings to Illinois residents including the copyrighted studies constituted a substantial part of the events at issue. In support of its contentions, Gencor submitted only a transcript of the alleged voicemail. Gencor did not submit any mailings that had been sent to Northern District residents or a declaration stating that the voicemail had been received at a Northern District telephone number. The Court held that Gencor's unsupported "bare allegations" did not meet Gencor's burden of proving that venue was proper.
Practice tip: You must support factual allegations with evidence. Local Rule 56.1 forces parties to follow this advice for summary judgment motions (although many fail to follow the rule). But the requirement, although unwritten, is no less important for other motions. If you are ever not sure whether an allegation requires evidentiary support, err on the side of providing the support. I have never seen an argument lost because a party unnecessarily supported its factual allegations.
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Last Thursday, the Senate Judiciary Committee began marking up the Patent Reform Act. At the beginning of the Committee's public markup session, Committee Chairman Leahy (D-Vt.) stated that he wanted to finish the markup Thursday, vote on the bill and send it to the full Senate. The Committee, however, only got through two amendments, one of which was a "manager's amendment" which just includes technical/clerical revisions." And Leahy, prodded by several Republican senators and Dianne Feinstein (D-Ca.), agreed to provide the Committee additional time to consider the Act further. The one substantive amendment (which you can read here) further limited venue in patent cases. The amendment was strongly worded stating that in any patent case:
. . . a party shall not manufacture venue by assignment, incorporation, or otherwise to invoke the venue of a specific district court.
This preamble language is very interesting. It has the potential to lead to a big increase in initial motion practice in which defendants argue that whatever entity sues them was created to create venue in the jurisdiction. But this problem is seemingly resolved because in almost all cases plaintiff's principal place of business or state of incorporation will not create venue, it will almost always be based upon defendant's footprint and infringing activities. The amendment goes on to specify that venue would be proper:
1. where defendant has a principal place of business or is incorporated;
2. where defendant has committed "substantial" infringing acts and maintains a physical facility constituting a "substantial portion" of defendant's operations; or
3. where plaintiff resides, if plaintiff is a university or an individual inventor.
The 271 Patent Blog also has a good post on the markup.
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Varitalk, LLC v. Lahoti, No. 07 C 1771, 2007 WL 1576127 (N.D. Ill. May 30, 2007) (Conlon, J.).
Judge Conlon denied defendant Dave Lahoti's ("Lahoti") motion to dismiss plaintiff Varitalk's complaint for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2), improper venue pursuant to Fed. R. Civ. P. 12(b)(3) and forum non conveniens. Varitalk had a principal place of business in Chicago, where it developed software to relay highly customizable pre-recorded audio messages to consumers that were indistinguishable from live human voice. Varitalk registered a trademark in its name "Varitalk" for use in connection with this business. Lahoti is an individual residing in California where he operates various businesses using websites, such as www.omegaworks.com and www.crosspath.com. Lahoti registered the domain name www.veritalk.com, where he set up an internet portal which allowed visitors to his site to click through links to buy various products or services. The Court held that Lahoti's website fell in the gray area between active websites (which create specific jurisdiction) and passive websites (which do not create specific jurisdiction). But the portal's interactive and commercial nature - Lahoti earned income from the site based on how many visitors clicked on links on the site and whether they bought products from the linked sites - combined with Varitalk's evidence that some consumers were confused and erroneously visited Lahoti's portal, create specific jurisdiction over Lahoti. On the other hand, Lahoti's email exchange with Varitalk's CEO Frederick Lowe, initiated by Lowe, regarding whether Lahoti would sell his portal to Varitalk did not create specific jurisdiction because the exchange was limited and not initiated by Lahoti.
The Court held that venue was proper in Illinois because a substantial part of the events giving rise to the claims occurred in Illinois and because Varitalk alleged that Illinois consumers were confused by Lahoti's portal.
Finally, the Court dismissed Lahoti's forum non conveniens argument because the doctrine only applies where the alternative forum is outside the United States or its territories. Where the alternate venue is California, or any other state, the defendant would have to move to transfer venue pursuant to 28 U.S.C. Section 1404(a).
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According to this Law.com article, effective May 1st the Northern District of Texas, based in Dallas, has instituted local patent rules similar to those used in the more famous (at least in patent circles) Eastern District of Texas, which were modeled after the Northern District of California’s Local Patent Rules. Additionally, the Southern District of Texas, … Continue Reading

About the Author

R. David Donoghue is a patent trial attorney and partner with Holland & Knight’s Intellectual Property Group in Chicago. A trusted counselor to his retail and supply chain clients, Dave routinely speaks to groups of all sizes on an array of intellectual property topics. Chicago IP Litigation was created to help businesses understand their intellectual property rights and how to drive their cases to positive resolution.

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